Treasury bonds, or...

Treasury bonds, i.e. long-term securities issued by the government, are a safe and stable form of investment. Their main advantage is the guarantee of return of principal and interest, which minimizes the risk of losing funds. These bonds are often chosen by investors looking for reliable and predictable returns, especially during periods of economic instability. There are different types of government bonds available, including adjustable-rate bonds, which protect against inflation, and fixed-rate bonds, which offer stable returns throughout the life of the investment. Investing in Treasury bonds is relatively simple – they can be purchased directly from the State Treasury or through banks and investment platforms. Thanks to their transparency and security, Treasury bonds provide a solid foundation for any investment portfolio.

Treasury bonds are registered in the securities depository created by the National Depository for Securities. The Register contains the data of persons who are entitled to the rights of bonds. All bonds, not only Treasury bonds, assume the following conditions:

• the redemption date after which the issuer is obliged to redeem the bond;
• the nominal price, i.e. the value that the issuer returns;
• issue price, i.e. the price at which the bond is sold at the time of issue to the first buyer;
• the transaction price at which the bond is sold during its term;
• interest rate, i.e. the value of interest.

The first type of Treasury bonds are savings bonds intended for people who want to save regularly. They offer a fixed interest rate, so investors can count on a certain profit. Inflation-indexed bonds, on the other hand, protect capital against a decline in the value of money. Long-term bonds, on the other hand, are issued for a period of up to 30 years. They are used by people planning long-term investments, e.g. for retirement. Short-term bonds, in comparison, are issued for a period of several months to several years. They will be best for investors looking for a quick return on their investment, which is what we often talk about on our training platform.

How it works

The issuer of Treasury bonds becomes the investor's debtor, and the investor becomes a bondholder at the time of purchase of securities, and on this account receives guaranteed interest paid for the entrusted cash capital. A big advantage here is the security of saving money. The bondholder takes full responsibility for the debt and is responsible for such an obligation with all his assets. Even if he dies during the investment, the bonds are not lost, but are subject to inheritance and are part of the estate.

There are also fixed and variable interest rate bonds. The former offer a fixed interest rate throughout the life of the investment, which is why they are used by investors for whom stability and predictability of profits are important. In the case of variable-rate bonds, it changes depending on economic indicators such as inflation. They may be associated with greater profits during periods of rising inflation, but they also come with greater risks.

Buying and selling

Treasury bonds are not a generally and widely available instrument. They can be purchased at auctions for large investors during wholesale bonds. This option is generally used by banks, and individual investors can buy such bonds through brokerage houses. Another option is to purchase Treasury bonds through an issue agent, and with the help of an investment fund. To handle transactions related to treasury bonds, you need to have a special account, but this does not mean that you need to use other services offered by a given bank.

What about the sale of bonds? Here it is worth taking a look at Webinar Universe, because the conversion is an opportunity to extend savings, which means that with the money from the bonds being redeemed or parts of them, you can buy any bonds available in the new offer. This is one of the options for selling bonds. In such a case, the so-called instruction to convert into new issue bonds must be submitted. Savings bonds, e.g. 2-, 3-, 4- and 10-year bonds, can be sold before the maturity date, but you must use the early redemption option, and the value of the accrued interest will be reduced by a fee, the amount of which is specified in the issue letter of the bond.

A future-proof investment?

Bonds can be a good part of a diversified investment portfolio. They can be a replacement for bank deposits or an independent investment. It is worth taking into account that the interest rate on this type of instruments is not particularly high. The benefits of investing in Treasury bonds are nevertheless large, and they include investment security, a steady income, and protection against inflation. Bond yields, on the other hand, may be lower compared to other assets, such as stocks or mutual funds.

At Webinar Universe , we also mention that you have to take into account that the market value of bonds may fall, which in turn affects their attractiveness. Treasury bonds will be a good investment option for people who are looking for safe and stable solutions that provide capital protection. Still, as with any investment, you need to do a thorough market analysis and understand the risks associated with investing. The main reasons for the popularity of bonds are their easy availability, wide possibilities of purchase, and a chance to invest also for people who do not want to invest a lot of money or risk a lot.

Treasury bonds are a capital investment proposal for novice investors and people looking for alternatives to savings deposits. They involve much less risk than other assets in which more experienced people invest. However, they may not work out entirely if the investor wants a large profit.